Call for evidence: Client protection
1 October 2014
- The deadline for submissions in response to this call for evidence was 30 September 2014.
- The information that appears below is for reference purposes only.
- A report on the submissions we received will be published here in due course.
Compensation Fund and Professional Indemnity Insurance
On 7 May 2014, we announced a major programme of regulatory reform. The aim of the reform is to reduce regulatory burdens for law firms while maintaining important protections for consumers.
We published a policy statement (www.sra.org.uk/reform) that set out our new approach, which is to:
- remove unnecessary regulatory barriers and restrictions to enable increased competition, innovation and growth to serve the consumers of legal services better
- reduce unnecessary regulatory burdens and cost on regulated firms
- ensure that regulation is properly targeted and proportionate for all solicitors and regulated businesses, particularly small businesses
As part of this programme, we launched a number of supporting consultations. These included proposals for changes to professional indemnity insurance arrangements and the introduction of eligibility criteria setting out who can make a claim to the SRA's Compensation Fund.
We received a large number of responses which were broadly supportive of the need for reform if not supportive of the specific proposals, and some suggested that further information was needed before the proposals could be progressed. Summaries of the responses are available:
So we are now issuing a call for evidence to inform the work we are doing to further improve the way in which client protection is delivered through the Compensation Fund and professional indemnity insurance arrangements.
Respondents to the consultations stressed the importance of understanding how these two measures impact upon each other and so we would welcome contributions which address both, either separately or together. We invite contributions from firms, consumers and their representatives - as well as other interested stakeholders.
We are particularly interested in contributions which provide evidence about the following issues:
- the ways in which regulation can reduce the risk of claims arising
- the extent to which the loss arising from claims should be apportioned between insurers, the Compensation Fund, firms and claimants
- the impact of the PII Minimum Terms and Conditions
- the extent to which insurance cover should be more closely aligned to the nature of the legal services provided
- the extent to which client protection arrangements are understood by consumers and are a driver of consumer behaviour
We are happy to accept contributions in any form, but particularly welcome the following:
- signposting to relevant research
- published or privately held data
- evidence from other jurisdictions or markets
- other relevant information
Please note that in April we published all the information we had collected as part of our review of compensation arrangements. This includes:
- Information on the our current compensation arrangements
- A comparative review of other professional bodies and jurisdictions operating a compensation fund
- An analysis of the claims made on the compensation fund
- A summary of the Compensation Fund accounts
The pack also includes links to a review carried out by the Legal Services Consumer Panel into financial protection available for consumers of legal services. The pack can be accessed at www.sra.org.uk/compreview.
We will expect to publish your response to this call for evidence and the name of your organisation unless you ask us not to (but please note that, even if you ask us to keep your contribution confidential, we might have to release it in response to a request under the Freedom of Information Act). We will not publish your own name unless you wish it to be included.